Memory Chip Shortage Makes Budget Smartphones 'Impossible to Manufacture' Profitably

As the memory chip shortage persists, budget smartphone makers are taking the hardest hit, with analysts warning that low-priced handsets have become “impossible to manufacture” profitably.

The cost of memory for handsets priced under US$100 is expected to surge 400 per cent in the third quarter of 2026, with the bill of materials for the most common configuration reaching US$70 from just US$14 in the same period last year, according to data from research firm Omdia.

Current memory prices have already exceeded the total bill of materials for this segment from a year ago, according to Jusy Hong, senior research manager at Omdia.

“Considering the memory price hike, it is impossible to manufacture smartphones below US$100 at the moment …[or] in the near future,” Hong said during a webinar on Friday.

Major smartphone vendors would try to abandon the money-losing segment despite strong consumer demand, pivoting to more value-added products in the mid-range categories, which in turn would drive up average retail prices, Hong added.

When memory prices stabilised in another year or two, small players in local markets were likely to revive the ultra-low-price segment, but for now “this market is simply disappearing”, Hong said.